Credit Suisse IV Equity Ideas Conference 2011

CORPORATE PRESENTATION

Credit Suisse IV Equity Ideas Conference 2011

January, 2011

1

AGENDA

1. Company Overview

2. Strategy

3. Financials

4. Recent Developments

5. Quality Requirements

6. Conclusion

2

– Distance learning launching

– New academic model

– Shared Services Center (“SSC”)

– 2005 – 2007: for-profit transformation

Greenfield Growth

Consolidation of national leadership

Listed Company

and preparation for growth

4.8%

22.5%(5.5%) 4.4%

1970 … … 2002 … … 2007 2008 2009… 80’s - 90’s …

41.7%

1.5%23

141

178

218206

216

35

# of students (‘000)

CAGR

Turn around Turn aroundIPOIPO

Follow-OnFollow-On

– Acquisitions in the São Paulo market – GP acquires 20% of Estácio

– Estácio joins in Novo Mercado

– Organic growth

– M&A

– Efficiency gains

– Distance Learning

– Complete management organization restructuring

Note: Until 2007 the student base did not include graduate students.

9M10

ESTÁCIO: KEY MILESTONES

3

ESTÁCIO’S REGIONAL FOOTPRINT¹

KEY FIGURES

HIGHLIGHTS

.

..

.

...

..

...

.

.

..

.

.

ESTÁCIO AT-A-GLANCE

– Largest private post-secondary education group in Brazil

– Leading presence in the large and underserved working adults target group

– Diversified portfolio of programs with differentiated quality and competitive pricing

– Only Brazilian education company listed in Novo Mercado

Nationwide operations, covering states that account

for 86% of GDP and 82% of population

University Center

University

College

In process to Upgrade to University Center

. Distance Learning Center

216k students

69 campuses in 35 major cities in Brazil

51 accredited Distance-learning Centers

78 programs

(1) Estácio also owns a University in Paraguay with 2.7 thousand students

4

76mm

98mm+22mm

EMERGING CLASS¹

Brazilian Population189 milhões

Population Agedfrom 18 to 35 years

57 MM

Enrolled in PostSecondary Programs

4.9 MM

Graduated in PostSecondary Programs

5.1 MM

Penetration = 17%

FOCUS ON MIDDLE AND LOWER CLASSES²

43%

52%

2003 2008

Estácio’s Target

A Class B Class C Class D&E Classes Total Mkt

77% 36% 9% 3% 17%

2.3 5.7 2.1 0.48 10.6

22% 54% 20% 5% 100%

0.7 10.1 21.2 15.5 47.6

1% 21% 45% 33% 100%

Emergence of a class C with enormous consumption power and increasing awareness of the value of education

(% households, Apr/03 – Apr/08)

Income per capita CAGR of 4% since 1980 and 22 million individuals entered the class C income segment in the last 5 yearsAccording to FGV, 36 million people will join class C over the next 4 years

Note: (1) Households earning: R$1,064 to R$4,591 per month (2) PNAD - IBGE

Market size and penetration per Income Brackets:

Penetration Level

Current Mkt Size

Share of Penetrated Mkt

Unpenetrated Mkt

Share of Unpenetrated

ATTRACTIVE MARKET ENVIRONMENT

5

AGENDA

1. Company Overview

2. Strategy

3. Financials



6. Conclusion

6

Quality of Products

Sales & Marketing

GrowthOpportunities

EfficiencyGains

StrongManagement

Culture

VALUE CREATION STRATEGY

7

8

DIFFERENTIATED QUALITY PROCUCTS…

Innovation and product reengineering aiming at better quality at competitive pricingInnovation and product reengineering aiming at better quality at competitive pricing

….WITH REDUCED COSTS

Higher attraction and retention of

students

Higher attraction and retention of

students

Improved gross margin

Improved gross margin

41 programs updated to labor market

demands (90% of Estácio’s current student

base)

Tailor made text books bundled in tuitions

Comprehensive student portal

On-line library with more than 2,000 titles

Integrated curricula with shared

disciplines

20% of distance learning content in on-

campus programs

20% of on-line self-learning activities

NEW ACADEMIC MODEL DRIVING QUALITY AND EFFICIENCY

8

STRUCTURES SALES FORCE

MARKET INTELLIGENCE

BRANDING AND ADVERTISING

Screening of key geographies and targets for:

- New programs and revenue sources

- Expansion through new units

- M&A targets

Geographical and channel segmentation

7,000 high schools and 2,000 companies regularly visited for

student sourcing

Trade marketing approach

Full planning, execution and tracking for all admission cycles

Strong national brand equity:

2nd most valuable brand in the education sector and

48th overall, by InBrands

New media channels (online and social networks)

SALES & MARKETING EFFORTS

9

OTHER ORGANIC OPPORTUNITIES

Market share gains, increased points of presence and time to market

Market share gains, increased points of presence and time to market

(Students in thousands)

Quality of education coupled with technology and support

Lower average ticket: bringing D Class to the addressable market

No additional CAPEX: 51 centers within our 69 campuses

Higher profitability

Launching of new programs and courses

Focus on high growth segments according to market

needs (Ex: courses for oil & gas, infrastructure and tourism

industries)

Opening of new campuses

Geographic expansion

New revenue sources

Corporate education and vocational courses

6.2 7.5

14,919.2

22.3

1.62.1

1.5

1.7

2.4

set/09 dec/09 mar/10 jun/10 set/10

+216.7%24.7

20.9

16.4

9.67.8

Graduate

Undergraduate

ORGANIC GROWTH OPPORTUNITIES

DISTANCE LEARNING

10

8 17 17 17 1713

2

124

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

North and NE48

Central Brazil30

SP and South32

Rio de Janeiro10

<Region><# of Targets>

M&A

Course period

120

R$ / month

2.016 private Entities

247

Long-term financing to low-income students

3.5% a.a. nominal interests with 18-year term

No guarantor required from 2011 onwards

Allows further penetration in Classes C and D

Students become more quality sensitive and less price sensitive

Lower level of drop-outs: financing is currently the major reason for drop-outs

Size over 2 thousand studentsAttractive citiesStrategic fitAssets quality

Example: payment flow for a 100% FIES financed of a 4-year course

and R$600/month tuition

MARKET GROWTH OPPORTUNITIES

STUDENT FINANCING

11

46%

44%43%

44%

42%

2007 2008 2009 9M09 9M10

19%18%

17% 17%16%

2007 2008 2009 9M09 9M10

1

2

3

(1) Excluding INSS and non-recurring

3

2

( as a % of net revenues)

( as a % of net revenues)

Product reengineering – new academic model

More efficient faculty cost allocation:PPC modeling and control

Management on a unit-by-unit basis(individual P&Ls and internal benchmarking)

Zero based / matrix budgeting

Strong cost austerity1

Centralizationof back-office (SSC) Scalability

Better managementof receivables

Lower bad debtprovisions

EFFICIENCY GAINS

LOWER OPERATING COSTS PERSONNEL COSTS¹

G&A DILUTION G&A

12

Culture set to groom internal talents for self-sustained growth– Excellence in human talents in all levels is top priority

Capacity to attract and retain new talents– Trainee programs and accelerated meritocratic career planning in all levels

Expertise in education combined with experience from several industries

Management by “walking around” to guarantee execution and disseminate culture– 220 managers with individual, monthly tracked goals driving their variable compensation– 68 units visited by CEO in the first 18 months

Stock options & variable compensation fully aligned with shareholders– EBITDA based variable compensation for executives, managers and faculty members– Stock option to 28 senior executives (up to 4.5% of capital to be granted)

Result-oriented culture is key to differentiation and long-term sustainability of business model

RESULT-ORIENTED MANAGEMENT CULTURE

13

AGENDA

1. Company Overview

2. Strategy

3. Financials



6. Conclusion

14

178,1206,7

186,9 180,7

11,6

9,2 10,87,5 22,32,1

2,4

STUDENT BASE NET REVENUES

AVERAGE TICKETS

178.1

218.3205.7

216.2

( in ‘000 students ) total

Distance Learning GraduateDistance Learning Undergraduate

On Campus GraduateOn Campus Undergraduate

2007 2008 2009 Set/10

+22.6%

–9.6%

STUDENT BASE AND REVENUES

+14.0%+2.9%

-0.1%

(1) Average ticket = net revenues in the period over student base at the end of the period

On Campus Average Ticket Distance Learning Average Ticket

399,5 417

158,8 173,7

9M09 9M10

-6.9%

+9.2%+4.4%

15

58,8 55,5 61,941,7 41,1

4,8 7,57,8

6,3 8,3

100,6114,7 99,7

74,5 70,1

2007 2008 2009 9M09 9M10

32,6

58,9

43,8

23,8 26,4

16,9

24,9

30,1

2933,6

2007 2008 2009 9M09 9M10

396,5 427,4 431,7

332,2 312,5

41,759,1 74,3

57,1 62,7

75,4

92,697,4

74,6 72,0

40,5

49,952,1

40,0 48,0

2007 2008 2009 9M09 9M10

STRICT CONTROL OF COSTS AND EXPENSES

Better management of faculty offset the step up of INSS and inflation

Better management of faculty offset the step up of INSS and inflation

Benchmark delinquency in the industryDiscretionary increase in marketing to

advertise new academic model and FIES

Benchmark delinquency in the industryDiscretionary increase in marketing to

advertise new academic model and FIES

Note: (1) Not considering depreciation and non-recurring items

Real decrease in G&A expenses – scalable model

Real decrease in G&A expenses – scalable model

6.9% 7.9%7.3%8.6%5.8%64.8%65.9%65.0%64.2%64.4%73.9

16.0% 15.6%16.8%18.1%19.1%

% of net revenues( in R$ million )

Payroll INSS Rentals Others

554.1

629.1655.5

503.9495.2

49.5

83.8

73.9

52.8

60.0

PDD Marketing

% of net revenues( in R$ million ) % of net revenues( in R$ million )

164.2177.7

169.4

122.5119.5

Payroll INSS Others

COST OF SERVICES SELLING EXPENSES G&A EXPENSES

16

100,3 98,4119,1

93,4 100,2

2007 2008 2009 9M09 9M10

282,8 319,8 321,3

236,4 254,6

2007 2008 2009 9M09 9M10

SIGNIFICANT ROOM FOR MARGIN EXPANSION

ADJUSTED GROSS PROFIT (R$MM) AND GROSS MARGIN¹

ADJUSTED EBITDA (R$MM) AND EBITDA MARGIN (%)¹

32.6% 31.9% 30.9% 33.3%32.9%

Note: (1) On a recurring basis

Student base growth and efficiency gains will leverage margin expansionStudent base growth and efficiency gains will leverage margin expansion

10.0% 11.8% 12.2% 13.1%11.7%

% of net revenues

17

SOLID CASH POSITION

NET CASH (NET DEBT) AS OF 30-SEP-2010 (R$MM)

DIVIDENDS DISTRIBUTED (R$ MM) AND PAYOUT RATIO

% of net income

52.6% 56.7% 50.0%

AESA

kroton

ESTACIO

16.1

-0.6x

Net debt/EBITDA LTM

238.5

(130.8)

18

AGENDA

1. Company Overview

2. Strategy

3. Financials



6. Conclusion

19

OWNERSHIP STRUCTURE

19%5%0%

76%

GP Investments Administrators and Counselors TreasuryFree Float

BEFORE PUBLIC OFFER AFTER PUBLIC OFFER

20%0%

0%

28%36%

5%5% 5%

GP Investments Administrators and CounselorsTreasury Free FloatJoao Uchoa Cavalcanti Monique Uchoa CavalcantiAndre Uchoa Cavalcanti Marcel Uchoa Cavalcanti

Free Float reaches 76%

Number of shares78,751,843




20

December

November

October

September

August

July

June

May

April

March

February

January

STOCK PERFORMANCE 2010

ESTACIO’S LIQUIDITY

1.1 MM

Average Daily Trading Volume (Reais)Before vs. After the Public Offer

+680%

Public Offer Announcement

8.7 MM

60

65

70

75

80

85

90

95

100

105

110

115

120

ESTC3 IBOV

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

STOCK PERFORMANCE AND MARKET VALUE

Stock price increases 39% after the Public OfferStock price increases 39% after the Public Offer

1.9 1.5 2.2

Market Cap (in R$ billion)

Average Trading Volume grows over 6 times from Jan-Aug to Sep-DecAverage Trading Volume grows over 6 times from Jan-Aug to Sep-Dec

21

EXPANSION THROUGH NEW CAMPUSES

CHACARA FLORA CAMPUS SULACAP CAMPUS

Location: Rio de Janeiro

Number of courses: 18

Capacity: 3200 students per shift

Location: Rio de Janeiro

Number of courses: 18

Capacity: 3200 students per shift

Location: São Paulo

Number of courses: 2 (niche programs)

Capacity: 2100 students

22

SALES & MARKETING EFFORTS

“TIRA DÚVIDAS” PROJECT

ESTÁCIO´S POINTS OF SALES

CLICK PROFISSÃO

Sale outlets well located

Focus on neutralizing the actions of our competitors

Promote brand and products

Promote vocational tests

Events in high schools

Educational stands at the subway

Estacio professors answer population’s doubts

STRUCTURED TRADE MARKETING AND FOCUS ON DIRECT MARKETINGSTRUCTURED TRADE MARKETING AND FOCUS ON DIRECT MARKETING

23

COMING SOON

24

TOWARD A CULTURE OF SUSTAINABILITY

IN 2009, 200.000 STUDENTS WERE ACHIEVED BY OUR 206 PROJECTS TO THE COMMUNITY

2008 2009

50% 36%

40% 36%

10%

29%

Health Area Legal Area Others

500.000

700.000

COMMUNITY ATTENDANCE

+40 %

25

AGENDA

1. Company Overview

2. Strategy

3. Financials



6. Conclusion

26

HIGH EDUCATION EVALUATION

IES

COURSE

ACCREDITATION

REACCREDITATION

AUTHORIZATION*

RECOGNITION

RECOGNITION RENEWAL

Accreditation Assessment

Grades

Accreditation Assessment

Grades

CPC²CPC²

¹General Index of Courses – Represents the average weighted graduate and undergraduate grades from each institution; ²Preliminary Course Concept; ³Represets the highest wight in the CPC calculos compositon; *If the IES is a College, and doesn’t have autonomy; except Law, Medicine, Odontology and Psicology.

REGULATORY EVENTS MEC EVALUATIONS

ENADEENADE

IDDIDD

Supplies³Supplies³

IES grades

Grades from courses in each minicipality

Graduate and undergraduate average grades

Graduate and undergraduate average grades

Infraestructure Faculty

Student satisfaction

Infraestructure Faculty

Student satisfaction

Positive assessmentmay render dismissal

of regulatory

events

5

4

3

2

1

(High Education Institution)

Negative assessment may render penalties by the Ministry of Education

(MEC)

IGC¹IGC¹

27

100% of Acts of Authorization submitted with MEC were granted with grades equal or above 3, by an External Assessment Committee.

Out of 50 municipality-courses evaluated by MEC in 2010, 48% exceeded the minimum grades required, reaching grades of excellence (4 and 5).

48% Grades 4 e 5

52% Grade 3

REGULATORY EVENTS RESULTS

100% Acts of Authorization

granted

100% Acts of Authorization

granted

28

Implementation of the New Academic Model;

Dashboard of regulatory compliances;

Action plans to all and evey regulatory events;

Legal Opinions, Tecnical Notes and Reports issued by Central Compliance

Intelligence;

Operations, academic and legal teams with goals and bonuses driven by

regulatory compliance.

MEASURES IMPLEMENTED IN 2010

29

AGENDA

1. Company Overview

2. Strategy

3. Financials



6. Conclusion

30

Management culture drives self sustained business model and long term growthManagement culture drives self sustained business model and long term growth

Scalable business model with margin expansion potentialScalable business model with margin expansion potential

Organic and M&A growth platformOrganic and M&A growth platform

Quality product and competitive pricingQuality product and competitive pricing

UNIQUELY POSITIONED IN A HIGH GROWTH MARKET

31

Investor Relations:Flávia de Oliveira

E-mail: [email protected]: +55 (21) 3311-9789Fax: +55 (21) 3311-9722

Address: Av. Embaixador Abelardo Bueno, 199 – Office Park – 6thfloor CEP: 22.775-040 – Barra da Tijuca – Rio de Janeiro – RJ – Brazil

Website: www.estacioparticipacoes.com/ir

This presentation may contain forward-looking statements concerning the industry’s prospects and Estácio Participações’ estimated financial and operating results; these are ere projections and, as such, are based solely on the Company management’s expectations regarding the future of the business and its continuous access to capital to finance Estácio Participações’ business plan. These considerations depend substantially on changes in market conditions, government rules, competitive pressures and the performance of the sector and the Brazilian economy as well as other factors and are, therefore, subject to changes without previous notice. We are a holding company, and our only assets are our interests in SESES, SESSA and IREP, and we currently hold 99.9% of the capital stock of each of these subsidiaries. Considering that the Company was incorporated on March 31 2007, the information presented herein is for comparison purposes only, on a proforma unaudited basis, relative to the first three months of 2007, as if the Company had been organized on January 1 2007. Additionally, information was presented on an adjusted basis, in order to reflect the payment of taxes on SESES, our largest subsidiary, which from February 2007, after becoming a for-profit company, is subject to the applicable taxation rules applied to the remaining subsidiaries, except for the exemptions arising out of the PROUNI – University for All Program (“PROUNI”). Information presented for comparison purposes should not be considered as a basis for calculation of dividends, taxes or for any other corporate purposes.

IR CONTACTS

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Credit Suisse IV Equity Ideas Conference 2011

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